Essay on Jdcw Hbr Case Study

1618 WordsOct 19th, 20147 Pages

John Deere Component Works (A)

A.1. How did the competitive environment change for the John Deere Component Works between the 1970's and the 1980's? What information must management accounting systems provide to support effective decision-making in these different environments?

The change in the competitive environment greatly influenced JDCW. The early 70s were the end of the post WWII boom period, during which time JDCW was expanding its operations and operating many of its manufacturing plants at capacity. However, there were multiple economic factors in the early 80s that negatively affected the demand for JDCW products. The effect of these economic factors is evidenced in the case study by the fact that during the 1970s…show more content…

A.2.

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Analysis: Under the existing cost system for the turning machine area, there are two direct costs and three cost pools for overhead costs. The two direct costs are simply Direct Labor and Direct Material, which are traced to the cost object, which is Machine Parts. The total overhead is split into three cost pools, which are the following: overhead applied on direct labor, overhead applied on material dollars, and overhead applied on ACTS machine hours. Furthermore, each cost pool is broken down into direct and period sub categories. The mentioned cost pools for the following cost drivers: Direct Labor dollars, Material dollars, and machine hours.

The above cost system was efficient during the 1980s because it split up overhead over three cost pools, adding an additional pool, which has machine hours as its cost driver. This proved efficient because “[w]ith increased usage of automated machines, direct labor run time no longer reflected the amount of processing being performed on parts, particularly when one operator was responsible for several machines.” Packet, pg. 7.

However, this system was found to be “ineffective for costing and bidding individual parts.” Id. While some machines produced low cost parts at high volume, other machines were producing high cost parts at low volume, which created cost discrepancies between various machines and thus misallocation of

the technology matures and suffices, industry standards will emerge, leading to standardisation of interfaces, which lets companies specialise in pieces of the overall system. The product becomes modular. The competitive advantage of Apple, in this case, could dissipate and the ability to turn a profit migrates to whoever controls the performance- defining subsystem. In the future, what will matter is the software inside that lets users organise their music with minimal effort.
Sound familiar?…

optimal moving into the
future, and if not, what decisions they need to make to achieve optimization. The
following analysis will outline the key factors inﬂuencing this decision and ultimately
suggest a course of action.
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Question 1:
The most critical shifts in Dell’s contextual factors, including industry dynamics, trends, technology changes and shift of the competitive landscape are following: The industry has changed significantly over the last 20 years. The traditional business model in the PC industry was inside-out, supplying machines based on orders from distribution, resell and retail channels, thus following the indirect selling concept. Dell’s direct…

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Case Analysis
Lawford Electric Company
Case Analysis
In this case, Robert Allen, a Field Sales Engineer for the Systems Controls department at Lawford Electric Company, has lost a very large sale with Bayfield Milling. Bayfield Milling’s average annual purchases with Lawford are about $50,000. The lost revenue on the bid discussed in the case was nearly $900,000.
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There is no
data available in the case on depreciation expenses or capital expenditures made by Dell in 1996 to
support the 52% growth of sales. However, if we refer to Dell’s full financial statements for 1996, we see
that Dell spent $100M on capital expenditures and we assume it will spend approximately the same
amount in 1997.
1
2
Richard Ruback, “Dell’s Working Capital,” Harvard Business Review 9-201-029 (2003): 3.
Ibid
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From the projected figures in the…

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